SEC, PCAOB accounting, auditing enforcement actions drop: Cornerstone

Dive Brief:

The number of accounting and auditing enforcement actions initiated in 2025 by the U.S. Securities and Exchange Commission fell 68% to 10 from 31 in 2024. Meanwhile, enforcement actions finalized by the Public Company Accounting Oversight Board fell 27% to 37 last year from 51, according to two separate reports from Cornerstone Research, an economic and financial consulting company.
Also last year, the total value of the SEC’s monetary settlements plummeted from $907 million in 2024 to $31 million, with nearly all (98%) being imposed during the then outgoing Chair Gary Gensler’s final weeks in office, according to the report on SEC enforcement. Monetary penalties imposed by the PCAOB fell 50% year-over-year to $17.6 million.
While enforcements have historically declined during periods of administrative transitions, such as that seen last year, the SEC’s accounting and auditing actions touched a nine-year-low and and were “significantly lower than in the first years of the prior two SEC chairs,” Jean-Philippe Poissant, co-author of the reports and co-head of Cornerstone’s accounting practice, said in a statement contained in a press release.

Dive Insight:

The reports come as many finance leaders are watching the new leadership of both the SEC and the auditing watchdog it oversees to gauge both the level of rigor as well as the priorities that will shape enforcement policies.

Margaret Ryan, director of the SEC’s division of enforcement and a former Marine and judge, in a speech before the Los Angeles County Bar Association last month acknowledged some “course correction” of the division’s operations was warranted, but that it remains focused on its mission to protect investors and enforce federal securities laws “in accordance with the chairman’s focus on returning to the basics.”

“Put another way — reports that enforcement work at the SEC has been tossed to the wayside are not only greatly exaggerated but flat out wrong,” she stated according to a copy of the Feb. 11 speech on the SEC’s website. “But I will say that I am far more concerned with the quality and impact of the enforcement actions that we bring than with chasing numbers.”

Well before SEC Chair Paul Atkins was sworn into office last April, President Donald Trump’s pick for the post and the departure of his predecessor Gary Gensler was expected by many to usher in a new era of more targeted enforcement and more collaborative rule-making. In January, Demetrios Logothetis, a retired partner at the Big Four firm EY, was named to succeed Erica Williams as chair of the PCAOB, which was created by Congress in 2002 following multi-billion-dollar accounting scandals at Enron and WorldCom.

The first full year of a new chair has typically brought a rebound in enforcement. Poissant and his co-author Russell Molter said they’d be watching to see if that plays out this year even as staff cuts have hit the SEC.

“Clearly based on the speech from director Ryan…they take the core view of what the SEC should be doing is getting back to basics and that includes accounting fraud,” Poissant said in an interview. “The level of staffing is lower but I don’t think it would prevent a rebound.”

To date, one of the highest profile SEC actions this year was a complaint filed in January against Archer-Daniels-Midland’s former CFO Vikram Luthar, alleging that he materially inflated the performance of the company’s key nutrition business segment when it was falling short of operating profit targets in fiscal years 2021 and 2022. That same day, the SEC announced that the Chicago-based ADM agreed to pay a $40 million civil penalty to settle charges that the company and two other former executives inflated the performance of one of its businesses.